It’s normal to get excited about your first business. You proceed to buy some fancy furniture, set up a nice waiting room, revamp the office and equip it with the latest gadgets, or even place some expensive action figurines to brag. You would think that, at some point, these details might truly help jump start your venture.
The sad reality is that it doesn’t really matter how much you invested in a company. Assets are not what determines the true value of a company, otherwise, you’d just be selling a good-looking establishment.
A business’s worth is determined after an arduous and exhaustive business valuation. New York City business brokers who are worth their buck will ask for financial statements, balance sheets, cash flow data, and a plethora of records in order to get a hint of the company’s profitability and growth potential. Contrary to what many would believe, these are highly objective metrics that will ultimately make a huge difference in a given business valuation.
New York City, despite its shortcomings, has one of the most competitive business-selling markets in the country. Hence, It takes a lot more than just showing furniture and gadgets in order to make a good sale. Even If you had all the trappings of a successful company, if you can’t manage to demonstrate your success with tangible financial data, no serious investor will show interest in what you have to offer.
What Actually Affects Business Valuations NYC
A detailed business valuation would take into account both internal and external data.
In terms of internal data, revenue is an important indicator, but not just revenue in and of itself. A company’s potential is truly manifest whenever there is recurrent revenue or revenue growth.
However, we should not overlook other factors such as market share, sales pipeline, customer portfolio, organization, and, yes, even infrastructure and assets (though they’re not decisive factors by a long shot!) Think of these factors as levers. The value you’ll get will be determined by how you go about moving those levers. This analogy will hopefully draw a more comprehensive picture of how you’re supposed to understand the term “value” in this context.
It’s true that market sentiment plays a big role in driving the price of your venture to interesting levels. Most people inside the markets are amateurs and not very savvy at measuring raw data, and there is a sweet spot wherein emotion can push the levers described earlier, albeit just slightly.
Some would take the extreme view that a company is worth whatever people are willing to pay for it, just as with any other asset. This is not entirely inaccurate, though there is some truth to that statement. Valuation is oftentimes performed using relative methods that look at the value of recent business sales for reference. This comparative assessment could be dangerous if not coupled with other variables, though.
Don’t perform a DIY business valuation. New York City is filled with competent business brokerage firms that could offer an honest evaluation of your company’s value and provide counsel throughout every stage of your negotiations with potential investors.Read More
A business broker is a very useful “asset” for you, regardless of whether you’re interested in buying or selling a business. Hiring the right New York City business brokers is crucial for a successful deal. However, you must choose wisely to save lots of headaches and potential losses down the road.
DON’T HIRE THE WRONG NEW YORK CITY BUSINESS BROKER!
Has it ever happened to you that you paid a so-called “professional” to perform a specific job and he/she actually ended up making matters worse? A sort of “buyer’s remorse” kicks in, in which you end up thinking that you might have done a much better job on your own.
The same risks can arise with business brokers. New York City is packed with a plethora of people who advertise themselves as “business agents”, but not all of them have the required credentials or experience to handle all the chores involved in a business sale. In some cases, they have the pedigree but are simply too negligent or lazy for the job.
Traits of a Bad Business Broker New York City
These are some of the most common signs that you’ve hired the wrong business brokers:
* They will hardly ever respond to your calls or messages, even during office hours (unjustifiably so).
* They don’t really have a good network of connections, bankers, and clients to make the deal go faster (even when they claim they do).
* Bad business brokers would scare good prospective buyers and lenders off, at times due to intransigence and, at others, due to arbitrary changes in the negotiation terms.
* They would most likely leave a business listing to its own luck after publication and hardly ever answer questions from inquirers.
* A lousy business agent will fail to do proper marketing for a prolonged period, killing the momentum and making you lose a lot of good selling opportunities.
TRAITS OF A GOOD BUSINESS BROKER NEW YORK CITY
These are, conversely, the characteristics you’ll find in _GOOD_ business agents:
* They work hard to define the fair value of a business according to the company’s financial status and market conditions. They make sure to let the client know why they came up with a given valuation, even if it does not meet the business owner’s expectations at first.
* They tend to have a background in banking and to know the ins and outs of how financial institutions operate when it comes to loan applications.
* They have good connections with bankers that can fast-track the lending process for buyers.
* They assist both parties instead of just the one that hired them, so as to make the deal close faster and in the best interest of both.
* They’re prone to find a wide array of qualified potential buyers and, consequently, a great variety of offers for the seller to choose from.
* In the same vein, they actively screen businesses on sale to grant an investor with a long list of available options that match their interests.
* They’re capable of deterring the deal from being killed prematurely by the respective legal teams.
* They exercise a very aggressive marketing campaign in which they strive to display the company they’re aiding to sell under the best possible light.
Starting a business may seem like the obvious choice for many aspiring entrepreneurs. After all, many businesses started from scratch and were able to succeed. Nevertheless, nowadays, it’s much easier to buy a business in NYC than to set up a new one.
Surely, this could mean that you won’t get the moral recognition of having been able to erect an emporium with your bare hands, but you’ll get added benefits that will definitely help you overcome the typical entry barriers, meanwhile increasing your profitability in the short term.
As stated earlier, you get a myriad of advantages when deciding to buy a business. NYC is a difficult place to do startups owing to the overwhelming amount of competition in virtually all areas. However, business selling is a very common practice in big cities such as these.
Among other advantages of purchasing a business, you’ll get:
BETTER ACCESS TO LOANS TO BUY BUSINESS (NYC-BASED) OVER STARTUPS
To earn money, you must lose some. At times, even more than what you may have available. This means that you will require a loan to get you started.
Businesses that already have an existing structure can show a more tangible potential for return of investment, which means you’ll get green lighted more easily by banks than by simply showing some abstract projections that they may deem too risky or adventurous.
AN ALREADY ESTABLISHED BRAND
Within the purview of marketing, there is an excessive amount of advertising. Even in this day and age of free social platforms, you will struggle to make a name for yourself or to get spotlighted.
When you buy a business in NYC, you can reap the rewards of months or probably years of advertising work that have cemented the brand in the minds of a large portion of the target audience, especially in such a populous city.
This business most likely has an existing user or customer base, its own social media accounts with large followings, and a functioning thriving website that copes with heavy traffic.
AN OPERATIONAL BUSINESS
If you resolve to buy a business in NYC that has an existing operational structure not only will you be able to save a lot of money, but also time and frustration.
All the time it takes to devise working strategies (and going through failed ones), hire personnel, set up bank accounts, arrange departments, and file paperwork (especially in New York), apart from laying out publicity and advertisement strategies (as explained above) was, for the most part, spent in advance, so you will only have to worry about what’s ahead and how to improve your business model.
Get Professional Help
Are you in NYC and wish to buy a business? New York City business brokers are your best choice. With the assistance of a reputable brokerage firm, you’ll be capable of landing the best deals, as they help you sift through all the possible matches to find those that fit your exact search criteria.
Also, brokers accompany their customers every step of the way and have sufficient technical knowledge to get them through the most complex phases in the whole process, including bargaining, financing, and dealing with all the administrative paperwork.Read More